Does Vinod Khosla really own submerged land next to Martins Beach?

High-powered lobbyist Rusty Areias raised eyebrows across California last summer when he announced that his wealthy client, Vinod Khosla, owned much more than the golden crescent of Martins Beach — he owned acres of wet sand and rocks beneath the Pacific Ocean.

It was a rare and audacious claim, running afoul of a basic tenet of California coastal access: that the state holds tidelands and submerged lands — also known as sovereign lands — in trust for the benefit of the public. Critics charged it was further evidence that Khosla, who has blocked the public from visiting the secluded beach on his San Mateo County property, was an arrogant, out-of-touch billionaire.

Mark Massara, an attorney for the Surfrider Foundation, said recently that the claim was “preposterous” and shows that Khosla thinks he’s above the law.

Now, with a new law pertaining to Martins Beach having taken effect Jan. 1, the state of California has weighed in — against Khosla. The staff of the State Lands Commission, the agency that oversees California’s sovereign lands, has reviewed the ocean boundary at Martins Beach and found the venture capitalist’s claim to the tidelands and submerged lands to be without merit.

The question of who owns the tidelands — the area between the high and low tide lines — and offshore submerged lands is sure to be a lively topic of conversation this year during negotiations between the commission and Khosla’s representatives. The new legislation, which we covered Sunday, instructs the commission to broker a deal to buy a public right-of-way down to the beach. If the talks fail, the law asks the commission to consider forcing a sale through eminent domain.

Here is everything you need to know — and more — on the tidelands/submerged lands dispute. The upshot? Areias, Khosla and even a San Mateo County judge may have waded into an obscure area of law they don’t fully understand. And the judge was less than transparent in making one of his key findings.

Areias laid out Khosla’s position on the tidelands and submerged lands last summer while fighting against the legislation, authored by state Sen. Jerry Hill, D-San Mateo. They are the only public comments on the issue from Team Khosla, whose attorneys did not respond to several emails over the past few weeks.

Because of coastal erosion and the property’s origins in a 19th-century Mexican land grant, Areias told lawmakers, Khosla owns a big chunk of land that was above the water in the 1800s but is now submerged. There is no reason for the state to purchase a route to the beach from Highway 1, Areias argued, because there is no public land there for visitors to enjoy.

“To get to the public beach you’re going to have to go 300 feet out into the ocean,” Areias told the Assembly Judiciary Committee on June 24 (you can view the hearing here — the Martins Beach item begins at about the 10:45 mark). “The only public land is submerged under 40 feet of water.”

But Jennifer Lucchesi, executive director of the State Lands Commission, said her staff disagrees. The general rule for ocean boundaries in California is that they move with the land as it is shaped by the tide and erosion, she said last week, and Martins Beach is no exception. Surveyors refer to these borders as ambulatory boundaries or meander lines.

“The property boundary between state-owned public tidelands and private uplands at Martins Beach,” Lucchesi said, “is an ambulatory boundary based on the mean high tide line.”

Lucchesi is in a good position to know — her agency is charged with resolving California’s ocean boundary disputes.

Areias stood his ground in a recent interview, rooting his position on the ocean boundary in a) surveys by Khosla’s property manager that showed the coastline at Martins Beach has receded significantly and b) a 2013 ruling by San Mateo County Superior Court Judge Gerald Buchwald in a lawsuit filed against Khosla by a group called Friends of Martins Beach.

In the Friends of Martins Beach case, one of two lawsuits over public access to the property, Buchwald agreed with Khosla’s lawyers that California has no right to the tidelands at Martins Beach. The property’s original owners, Buchwald decided, had their interest in the land confirmed by a federal patent in 1852 without any mention of California’s public trust doctrine.

But there are some mistakes underlying Khosla’s surveys and the judge’s decision, said Curtis Fossum, who retired in 2012 as executive director of the State Lands Commission and now works for the agency as an attorney.

1) Fossum said Khosla’s team appears to have based its assessment of the boundary on the modern-day grant deed for Martins Beach, not the original federal patent. He provided us with a copy of the patent, and it does indeed cite a meander line.

But whether you look at the deed or the patent, the conclusion is the same, Fossum said: The tidelands and submerged lands do not belong to Khosla. It’s irrelevant that the property has its provenance in a Mexican land grant, he said.

2) As we mentioned in Sunday’s story, the State Lands Commission claims a private landowner cannot quiet title to sovereign lands in a lawsuit without naming the commission and giving the state the opportunity to present evidence. So Buchwald’s decision is vulnerable to a challenge. Gary Redenbacher, attorney for Friends of Martins Beach, says he has asked the commission to file an amicus brief as part of his appeal.

3) This one’s complicated, but important. Buchwald set his decision to a large degree on a misunderstanding of a 1984 Supreme Court decision involving Summa Corp. and the city of Los Angeles, said Fossum, who worked on the Summa case three decades ago. The high court found in the Summa case that the state could not assert a public trust easement over tidelands in Ballona Lagoon (part of Venice, Calif.), because the private property had its origins in a Mexican land grant that contained no mention of the easement. But there’s a key difference between the Martins Beach and Summa cases, Fossum said. Ballona Lagoon was located entirely within the boundaries of a Mexican land grant, whereas the tidelands at Martins Beach are on the periphery of the property, where the state’s sovereign rights begin.

And lastly, regarding Buchwald and transparency: It’s unclear how the notion of submerged lands ever made its way into the judge’s memorandum of decision, which was filed in April 2014, seven months after Buchwald delivered his oral ruling. A review by this newspaper of the six-volume case file at the Hall of Justice in Redwood City found no evidence or argument by Khosla’s lawyers in favor of claiming the submerged lands. Buchwald didn’t mention submerged lands in his October 2013 oral decision, and Khosla’s attorneys didn’t mention them in the proposed judgment they submitted to the court that December. Yet Buchwald’s final decision gave that land to Khosla anyway. The decision did not specify how much of the land was Khosla’s or point to any surveys that would spell it out.

Asked about the discrepancy between the court record and Buchwald’s decision, Redenbacher said he remains mystified.

“It came out of nowhere,” he said. “Frankly, you can’t get what you don’t ask for in your complaint.”